UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _____________
Commission File Number 0-25666
BANK WEST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-3203447
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2185 Three Mile Road, N.W., Grand Rapids, Michigan 49544
(Address of principal executive offices)
Registrant's telephone number, including area code: (616) 785-3400
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Shares of common stock, par value $.01 per share, outstanding as of May 14,
1998: 2,623,629.
<PAGE>
BANK WEST FINANCIAL CORPORATION
FORM 10-Q
Quarter Ended March 31, 1998
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-K is included in this Form 10-Q as referenced below:
ITEM 1 - Financial Statements
Consolidated Balance Sheets -
March 31, 1998 (unaudited) and June 30, 1997
Consolidated Statements of Income (unaudited) -
For The Three and Nine Months Ended March 31, 1998 and 1997
Consolidated Statements of Cash Flows (unaudited) -
For The Nine Months Ended March 31, 1998 and 1997
Notes to Consolidated Financial Statements
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
ITEM 2 - Changes in Securities and Use of Proceeds
ITEM 3 - Defaults upon Senior Securities
ITEM 4 - Submission of Matters to a Vote of Security Holders
ITEM 5 - Other Information
22
ITEM 6 - Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,603,556 $ 1,722,734
Interest-bearing deposits 3,621,875 1,950,522
------------- -------------
Total cash and cash equivalents 7,225,431 3,673,256
Interest-bearing time deposits 99,000 99,000
Securities available for sale (Note 5) 31,541,679 25,550,974
Securities held to maturity
(fair value: $9,042,877 at March 31, 1998, 8,986,168 4,003,575
$4,001,875 at June 30, 1997) (Note 5)
Trading securities 1,694,068 2,921,251
Loans held for sale (Note 6) 7,899,008 2,231,151
Loans, net (Note 7) 115,856,035 111,530,092
Federal Home Loan Bank stock 2,100,000 1,550,000
Premises and equipment 3,163,499 3,128,158
Accrued interest receivable 895,858 762,990
Mortgage servicing rights 295,528 148,569
Real estate owned 137,780 --
Other assets 460,302 76,175
------------- -------------
Total assets $ 180,354,356 $ 155,675,191
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 117,556,257 $ 102,862,152
Federal Home Loan Bank borrowings 38,209,202 29,000,000
Accrued interest payable 318,811 202,217
Advance payments by borrowers
for taxes and insurance 479,651 491,710
Deferred federal income tax 201,345 287,635
Other liabilities 158,319 239,168
------------- -------------
Total liabilities 156,923,585 133,082,882
------------- -------------
<PAGE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
Stockholders' Equity:
Common stock, $.01 par value; 10,000,000 shares
authorized; 2,623,629 issued at March 31, 1998
and 1,753,475 issued at June 30, 1997 26,237 17,535
Additional paid-in-capital 11,499,330 11,432,798
Retained earnings, substantially restricted 12,993,995 12,647,112
Net unrealized gain on securities available for
sale, net of tax of $110,869 at March 31, 1998
and $6,548 at June 30, 1997 227,925 12,710
Unallocated ESOP shares (Note 3) (907,248) (1,004,448)
Unearned Management Recognition Plan shares (Note 4) (409,468) (513,398)
------------- -------------
Total stockholders' equity 23,430,771 22,592,309
------------- -------------
Total liabilities and stockholders' equity $ 180,354,356 $ 155,675,191
============= =============
</TABLE>
See accompanying notes to consoldiated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest and dividend income
Loans $ 2,427,803 $ 2,047,688 $ 7,245,199 $ 5,997,175
Securities 626,847 478,728 1,755,483 1,387,561
Other interest-bearing deposits 41,365 51,549 105,523 174,140
Dividends on FHLB stock 38,871 28,550 113,940 86,760
----------- ----------- ----------- -----------
3,134,886 2,606,515 9,220,145 7,645,636
----------- ----------- ----------- -----------
Interest expense
Deposits 1,393,561 1,256,577 4,124,054 3,635,490
FHLB borrowings 485,186 294,039 1,481,624 853,879
----------- ----------- ----------- -----------
1,878,747 1,550,616 5,605,678 4,489,369
----------- ----------- ----------- -----------
Net interest income 1,256,139 1,055,899 3,614,467 3,156,267
Provision for loan losses 21,000 15,000 57,000 45,000
----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 1,235,139 1,040,899 3,557,467 3,111,267
----------- ----------- ----------- -----------
Other income
Gain (loss) on sale of securities 28,733 (2,421) 41,328 (4,291)
Gain on trading securities 9,721 98,865 179,023 577,936
Gain on sale of loans 147,132 123,473 465,744 399,691
Fees and service charges 64,434 79,926 232,978 224,928
Miscellaneous income 2,102 1,550 7,718 4,054
----------- ----------- ----------- -----------
252,122 301,393 926,791 1,202,318
----------- ----------- ----------- -----------
Other expenses
Compensation and benefits 718,688 561,475 2,062,229 1,663,136
Professional fees 60,370 56,186 222,638 160,184
Federal Deposit Insurance 16,231 14,727 47,711 103,280
FDIC Special Assessment (Note 8) -- -- -- 553,000
Occupancy 76,385 72,697 213,709 196,586
Furniture, fixtures and equipment 41,757 36,018 110,519 101,267
Data processing 50,909 47,144 143,537 133,191
Advertising 23,787 29,189 79,403 92,270
State taxes 19,000 16,000 66,978 43,000
Miscellaneous 165,515 126,668 417,484 378,417
----------- ----------- ----------- -----------
1,172,642 960,104 3,364,208 3,424,331
----------- ----------- ----------- -----------
<PAGE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Income before federal income tax expense 314,619 382,188 1,120,050 889,254
Federal income tax expense 106,800 129,650 380,060 302,350
----------- ----------- ----------- -----------
Net income $ 207,819 $ 252,538 $ 739,990 $ 586,904
=========== =========== =========== ===========
Basic Earnings per share (Note 2) $ .09 $ .11 $ .31 $ .22
=========== =========== =========== ===========
Diluted Earnings per share (Note 2) $ .08 $ .10 $ .28 $ .22
=========== =========== =========== ===========
Dividends per share $ .06 $ .05 $ .16 $ .14
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 739,990 $ 586,904
Adjustments to reconcile net income to
net cash from operating activities
Origination and purchase of loans for sale (35,692,295) (23,428,195)
Proceeds from sale of mortgage loans 30,490,182 26,442,386
Purchase of trading securities (2,530,635) (4,217,015)
Proceeds from sale of trading securities 3,936,841 3,719,423
Net (gain) on sales of:
Loans (465,744) (399,691)
Securities (220,351) (573,645)
Real estate owned (2,241) --
Depreciation 155,234 141,793
Amortization of premiums, net 49,215 11,964
ESOP expense 260,719 135,169
MRP expense 114,300 115,130
Provision for loan losses 57,000 45,000
Change in:
Deferred loan fees (87,431) 38,322
Other assets (562,573) (118,947)
Other liabilities (173,473) (203,404)
------------ ------------
Net cash from operating activities (3,931,262) 2,295,194
------------ ------------
Cash flows from investing activities
Increase in interest-bearing time deposits -- 199,000
Purchases of securities available for sale (21,323,884) (9,685,270)
Purchases of securities held to maturity (7,993,997) (3,002,813)
Proceeds from sale of securities 15,163,389 5,700,584
Proceeds from maturity or call of securities 3,000,000 1,000,000
Loan originations, net of repayments (2,808,910) (6,837,612)
Loans purchased (1,745,675) (805,300)
Principal payments on mortgage-backed securities and CMO's 499,391 459,126
Purchase of FHLB stock (550,000) --
Proceeds from sale of real estate owned 22,153 --
Property and equipment expenditures (190,575) (196,465)
------------ ------------
Net cash from investing activities (15,928,108) (13,168,750)
------------ ------------
<PAGE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from financing activities
Proceeds from FHLB borrowings 38,209,202 13,073,446
Repayment of FHLB borrowings (29,000,000) (9,000,000)
Increase in deposits 14,694,105 9,432,298
Dividends paid on common stock (393,107) (391,130)
Exercise of stock options 7,282 --
Repurchase of common stock (105,937) (4,818,866)
------------ ------------
Net cash from financing activities 23,411,545 8,295,748
------------ ------------
Net change in cash and cash equivalents 3,552,175 (2,577,808)
Cash and cash equivalents at beginning of period 3,673,256 6,694,089
------------ ------------
Cash and cash equivalents at end of period $ 7,225,431 $ 4,116,281
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $ 5,489,084 $ 4,457,462
Income taxes 678,119 336,050
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements consist of the accounts of
Bank West Financial Corporation (the Company), its wholly owned subsidiary, Bank
West (the Bank) and Sunrise Mortgage Corporation. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements have been
included.
The results of operations for the three and nine months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the year ending
June 30, 1998. The unaudited consolidated financial statements and notes thereto
should be read in conjunction with the consolidated financial statements and
notes thereto, for the fiscal year ended June 30, 1997, included in the
Company's 1997 Annual Report.
NOTE 2 - EARNINGS PER SHARE
Basic and diluted earnings per share are computed under a new accounting
standard effective for the quarter ended December 31, 1997. All earnings per
share (EPS) data for prior periods have been restated to be comparable. Basic
earnings per share is calculated by dividing net income by the weighted average
number of shares outstanding during the period, including shares that have been
released or committed to be released by the Employee Stock Ownership Plan (ESOP)
and fully vested Management Recognition Plan (MRP) shares. Diluted earnings per
share is computed as net income divided by the weighted average number of
outstanding common shares used to derive Basic EPS, plus the dilutive effect of
common stock equivalents relating to in-the-money stock options (both vested and
unvested) and unvested MRP shares, as determined under the treasury stock
method. All EPS data and weighted average share amounts have been adjusted
retroactively for the three-for-two stock split in December 1997.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 2 - EARNINGS PER SHARE (Continued)
A reconciliation of the numerators and denominators of Basic EPS and Diluted EPS
for the three and nine months ended March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings Per Share
Net Income $207,819 $252,538 $739,990 $586,904
======== ======== ======== ========
Weighted average common shares
outstanding 2,356,792 2,403,531 2,354,217 2,634,747
========= ========= ========= =========
Earnings Per Share $.09 $.11 $.31 $.22
==== ==== ==== ====
Earnings Per Share Assuming Dilution
Net Income $207,819 $252,538 $739,990 $586,904
======== ======== ======== ========
Weighted average common shares
outstanding 2,356,792 2,403,531 2,354,217 2,634,747
Add: dilutive effects of assumed
exercise of stock options
and unvested MRP's
Stock options 278,070 11,972 226,903 12,069
MRP shares 32,220 9,870 29,769 8,714
------ ----- ------ -----
Weighted average common and dilutive
potential common shares outstanding 2,667,082 2,425,373 2,610,889 2,655,530
========= ========= ========= =========
Earnings Per Share Assuming Dilution $.08 $.10 $.28 $.22
==== ==== ==== ====
</TABLE>
NOTE 3 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company has established an Employee Stock Ownership Plan (ESOP) for the
benefit of employees who have completed at least twelve consecutive months of
service and have been credited with at least 500 hours of service with the Bank.
The Company has received a favorable determination letter from the Internal
Revenue Service ("IRS") that the ESOP is a tax-qualified plan.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 3 - EMPLOYEE STOCK OWNERSHIP PLAN (Continued)
To fund the ESOP, $1,296,048 was borrowed from the Company for the purpose of
purchasing 243,009 shares of common stock at $5.33 per share. Principal and
interest payments on the loan are due in quarterly installments, with the final
payment of principal and accrued interest being due and payable at maturity,
which is June 30, 2005. Interest is payable during the term of the loan at a
fixed rate of 7.0%. The loan is collateralized by the shares of the Company's
common stock purchased with the proceeds. As the Bank periodically makes
contributions to the ESOP to repay the loan, shares are allocated among
participants on the basis of total compensation, as defined. The unallocated
ESOP shares are shown as a reduction to stockholders' equity in the accompanying
consolidated balance sheets. ESOP expense of $86,000 and $261,000 was recorded
for the three and nine months ended March 31, 1998.
NOTE 4 - STOCK BASED COMPENSATION PLANS
An employee stock option plan and a directors' stock option plan (SOPs) and an
officers' and a directors' management recognition plan (MRPs) were authorized by
the shareholders at the October 25, 1995 annual meeting. The employee stock
option plan and the officers' MRP are administered by a committee of
non-employee directors of the Company, while grants under the directors' stock
option plan and the directors' MRP are pursuant to formulas set forth in the
plans. Total shares made available under the SOPs and MRPs were 347,155 and
138,862, respectively. The Committee has awarded under the SOPs options to
purchase 309,689 shares of common stock at exercise prices between $6.625 and
$11.375 per share, which represent the average of the high and low sales prices
of the Company's stock on the dates of the awards. Both the option shares and
grant prices have been adjusted for the three-for-two stock split in December
1997. At March 31, 1998, there were 37,466 option shares reserved for future
grants. As of March 31, 1998, 1,000 options have been exercised. No compensation
expense was recognized in connection with the issuance of the options.
Management has concluded that the Company will not adopt the accounting
provisions of SFAS No. 123 and will continue to apply its current method of
accounting. Accordingly, adoption of SFAS No. 123 will have no impact on the
Company's consolidated financial position or results of operations.
On November 13, 1995, the Company repurchased 4% of its then outstanding shares
and placed them in a trust for the exclusive use of the MRPs. The Committee has
awarded 71,931 shares of common stock under the officers' MRP and 41,653 shares
of common stock under the directors' MRP. MRP awards vest in five equal annual
installments, with the first award vesting on October 25, 1996. Compensation
expense for the MRPs is recognized on a pro-rata basis over the vesting period
of the awards. During the three and nine months ended March 31, 1998, $38,100
and $114,300 was charged to compensation expense for the MRPs, respectively. The
unearned compensation value of the MRPs is shown as a reduction to stockholders'
equity in the accompanying consolidated balance sheets.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 5 - SECURITIES
The amortized cost and estimated fair values of securities at March 31, 1998 and
June 30, 1997 are as follows:
<TABLE>
<CAPTION>
Available for Sale
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
March 31, 1998 (unaudited)
U.S. agencies $ 3,995,250 $ 5,000 $ 1,000 $ 3,999,250
Equity securities 1,904,438 61,250 51,938 1,913,750
Mortgage-backed securities 1,189,683 167 17,538 1,172,312
Collateralized mortgage obligations 24,106,968 373,296 23,897 24,456,367
----------- ----------- ----------- -----------
$31,196,339 $ 439,713 $ 94,373 $31,541,679
=========== =========== =========== ===========
June 30, 1997
U.S. agencies $ 2,998,182 $ -- $ 21,544 $ 2,976,638
Mortgage-backed securities 1,579,891 4,016 1,212 1,582,695
Collateralized mortgage obligations 20,953,643 88,217 50,219 20,991,641
----------- ----------- ----------- -----------
$25,531,716 $ 92,233 $ 72,975 $25,550,974
=========== =========== =========== ===========
Held to Maturity
March 31, 1998 (unaudited)
Collateralized mortgage obligations 8,986,168 56,709 -- 9,042,877
=========== =========== =========== ===========
June 30, 1997
U.S. agencies $ 1,000,762 $ 1,113 $ -- $ 1,001,875
Collateralized mortgage obligations 3,002,813 -- 2,813 3,000,000
----------- ----------- ----------- -----------
$ 4,003,575 $ 1,113 $ 2,813 $ 4,001,875
=========== =========== =========== ===========
</TABLE>
Trading securities totalled approximately $1.7 million and $2.9 million at March
31, 1998 and June 30, 1997, respectively. Realized and unrealized gains and
losses on trading securities are included immediately in other income.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 6 - SECONDARY MARKET MORTGAGE ACTIVITIES
The following summarizes the Company's secondary market mortgage activities,
which consist solely of one- to four-family real estate loans:
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1998 1997
------------ ------------
<S> <C> <C>
Loans held for sale - beginning of period $ 2,231,151 $ 4,297,092
Activity during the periods:
Loans originated and purchased for sale 35,692,295 23,428,195
Proceeds from sale of loans originated
and purchased for sale (30,490,182) (26,442,386)
Gain on sale of loans 465,744 399,691
------------ ------------
Loans held for sale - end of period $ 7,899,008 $ 1,682,592
============ ============
</TABLE>
During the past quarter, loans were either sold with servicing retained or with
servicing released. The unpaid principal balance of mortgage loans serviced for
others amounted to $34.5 million and $27.0 million at March 31, 1998 and June
30, 1997, respectively. Custodial escrow balances maintained in connection with
the foregoing loans serviced for others were $135,798 and $116,813 at March 31,
1998 and June 30, 1997, respectively.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 7 - LOANS
Loans are classified as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
------------- -------------
<S> <C> <C>
Real estate loans:
One-to four-family residential - fixed rate $ 16,652,428 $ 18,595,586
One-to four-family residential - balloon 19,170,376 12,493,524
One-to four-family residential - adjustable 39,013,150 49,743,799
Construction 20,789,068 21,500,849
Commercial mortgages 4,173,140 2,764,314
Home equity lines of credit 9,125,534 6,370,698
Second mortgages 7,721,545 4,312,760
------------- -------------
Total mortgage loans 116,645,241 115,781,530
Consumer loans 1,742,485 1,081,391
Commercial non-mortgage 3,922,926 2,032,190
------------- -------------
Total 122,310,652 118,895,111
Less:
Loans in process 6,289,102 7,169,073
Deferred fees and costs (117,347) (29,916)
Allowance for loan losses 282,862 225,862
------------- -------------
$ 115,856,035 $ 111,530,092
============= =============
</TABLE>
Provisions for losses on loans are charged to operations based on management's
evaluation of potential losses in the portfolio. In addition to providing
reserves on specific loans where a decline in value has been identified, general
provisions for losses are established based upon the overall portfolio
composition and general market conditions. In establishing both specific and
general valuation allowances, management reviews individual loans, recent loss
experience, current and future impact of economic conditions, the overall
balance and composition of the portfolio, and such other factors which, in
management's judgment, deserve recognition in estimating possible losses. At
March 31, 1998, the total allowance for loan losses was 43.2% of total
nonperforming loans and approximately $21,000 of the allowance for loan losses
was allocated to specific loans.
Management believes the allowance for loan losses is adequate. While management
uses available information to recognize losses on loans, future additions to the
allowance may be necessary based on changes in economic conditions and borrower
circumstances.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Nine Months Ended March 31, 1998
(Unaudited)
NOTE 8 - FDIC SPECIAL ASSESSMENT
On September 30, 1996, as part of the omnibus appropriations package signed by
President Clinton, the government mandated a special assessment to recapitalize
the Savings Association Insurance Fund ("SAIF"), which is administered by the
Federal Deposit Insurance Corporation ("FDIC"). The one-time, special SAIF
assessment amounted to $.657 for every $100 of SAIF-insured deposits as of March
31, 1995. The FDIC notified the Bank that the Bank's special assessment was
$551,000, which after taxes reduced the Company's net income by $365,000 or $.13
per share in the quarter ended September 30, 1996. The Bank's deposit premiums,
which were $.23 for every $100 of assessable deposits in 1996, were reduced to
$.064 for every $100 of assessable deposits beginning January 1, 1997. Based on
the Bank's deposits at March 31, 1998, the premium reduction should result in a
pre-tax cost savings of approximately $195,000 per year for the Bank, or
approximately $.05 per share after taxes.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the consolidated financial condition of Bank
West Financial Corporation, its wholly owned subsidiary, Bank West, and Sunrise
Mortgage Corporation a wholly-owned subsidiary of Bank West, at March 31, 1998
and June 30, 1997 and the consolidated results of operations for the three and
nine months ended March 31, 1998 with the same period in 1997. This discussion
should be read in conjunction with the interim consolidated financial statements
and footnotes included herein.
This quarterly report on Form 10-Q includes statements that may constitute
forward-looking statements, usually containing the words "believe," "estimate,"
"project," "expect," "intend" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements. Factors that could cause future
results to vary from current expectations include, but are not limited to, the
following: changes in economic conditions (both generally and more specifically
in the markets in which Bank West operates); changes in interest rates, deposit
flows, loan demand, real estate values and competition; changes in accounting
principles, policies or guidelines and in government legislation and regulation
(which change from time to time and over which Bank West has no control); and
other risks detailed in this quarterly report on Form 10-Q and in the Company's
other Securities and Exchange Commission filings. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof.
Bank West Financial Corporation is the holding company for Bank West. In
December 1997, Bank West converted from a federally chartered savings bank to a
state chartered savings bank. Also, during December, Bank West formed Sunrise
Mortgage Corporation, a wholly-owned subsidiary engaged in originating and
purchasing non-conforming loans which, in turn, are all sold to investors on a
servicing released basis. Sunrise Mortgage Corporation did not materially impact
the Company's financial condition and results of operations in the quarter ended
March 31, 1998. Substantially all of the Company's assets are currently held in,
and its operations are conducted through, its sole subsidiary Bank West. The
Company's business consists primarily of attracting deposits from the general
public and using such deposits, together with Federal Home Loan Bank (FHLB)
advances, to make loans for the purchase and construction of residential
properties. The Company also originates commercial loans, home equity loans and
various types of consumer loans.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
FINANCIAL CONDITION
Total assets increased by $24.7 million or 15.9% from $155.7 million at June 30,
1997 to $180.4 million at March 31, 1998. The increase in total assets was
primarily attributable to an increase in securities available for sale of $5.9
million, an increase in loans held for sale of $5.7 million, an increase in
securities held to maturity of $5.0 million and an increase in net loan growth
of $4.4 million. Securities available for sale and held to maturity increased
due to the purchase of additional adjustable-rate collateralized mortgage
obligations. Loans held for sale increased due to the recent decline in the
overall interest rate environment which resulted in refinances primarily into
30-year fixed rate loans which the Bank generally sells to investors.
Total loans increased as greater emphasis was placed on originating home equity,
second mortgages and commercial loans instead of concentrating primarily on
residential mortgage banking activities. Management expects continued growth in
these types of portfolio lending activities which is expected to improve the
Bank's net interest spread. In addition, the Bank has increased its originations
of three to ten year balloon mortgages on one- to four-family properties in
effort to replace the recent run-off of one- to four-family loans, primarily
fully-indexed ARM's which have refinanced to lower fixed interest rate products
in the current interest rate environment. The substitution of ARM's with three
to ten year balloon mortgages is expected to have a moderately negative effect
on the average yield on interest-earning assets. However, the combination of the
above mentioned lending activities should not only contribute to increased loan
growth, but also have a positive impact on the Bank's net interest spread.
The Bank's mortgage banking activities consist of selling newly originated and
purchased loans into the secondary market. The dollar amount of loans originated
and purchased for resale in the nine months ended March 31, 1998 increased by
$12.3 million or 52.6% to $35.7 million compared to $23.4 million in the
comparable prior period. The increase in loan originations and purchases for
resale is primarily the result of the current decline in the overall interest
rate environment compared to the prior year as well as from the growth in the
Bank's wholesale mortgage banking operation. Total loans sold amounted to $30.5
million and $26.4 million in the nine months ended March 31, 1998 and 1997,
respectively. Loans held for sale amounted to $7.9 million and $1.7 million at
March 31, 1998 and 1997, respectively. The Bank continues to increase the number
of correspondent lending relationships and is exploring additional options to
increase retail loan volume. During the current quarter, the Bank sold the
majority of its loans held for sale either on a servicing retained or servicing
released basis. The majority of loans originated and purchased in the current
fiscal year have been 30-year fixed-rate loans. The Bank has sold the majority
of these loans, increasing the ratio of its interest-sensitive assets to its
interest-sensitive liabilities.
During December 1997, the Bank formed Sunrise Mortgage Corporation, a
wholly-owned subsidiary engaged to originate and purchase non-conforming
mortgage loans including sub-prime mortgage loans for resale. All of the loans
originated and purchased must have a commitment in place to sell the loan to an
investor on a servicing released basis. Sunrise Mortgage Corporation is expected
to break-even within six months and experience rapid growth during the next
fiscal year.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Mortgage-backed securities and collateralized mortgage obligations have
increased from $25.6 million at June 30, 1997 to $34.6 million at March 31,
1998. During the quarter ended March 31, 1998, the Bank purchased additional
adjustable-rate collateralized mortgage obligation floaters which is consistent
with the Bank's strategy of increasing the ratio of interest-sensitive assets to
interest-sensitive liabilities. At March 31, 1998, the unrealized gain on
securities (including mortgage-backed securities and collateralized mortgage
obligations) classified as available for sale totalled $228,000 net of federal
income taxes and is shown as an increase in stockholders' equity.
The Bank's nonperforming assets totalled $794,000 or .44% of total assets at
March 31, 1998 compared to $437,000 or .28% of total assets at June 30, 1997.
The increase in nonperforming assets is primarily due to construction loans to
builders collateralized by single-family homes and a $138,000 increase in real
estate owned. However, since these loans require a loan-to-value ratio of 75% or
less, management believes that these loans are adequately collateralized.
Accordingly, no specific reserves have been assigned to these nonperforming
assets. At March 31, 1998, the total allowance for loan losses was $283,000 or
43.2% of total nonperforming loans, and approximately $21,000 of the allowance
for loan losses was allocated to specific loans. During the nine months ended
March 31, 1998, there were no net charge-offs. At March 31, 1998, $95.6 million
or 78.2% of the Bank's total loan portfolio was collateralized by first liens on
one-to four-family residences, and the net loan portfolio amounted to 64.2% of
total assets.
Total deposits increased by $14.7 million or 14.3% from June 30, 1997 to March
31, 1998 primarily due to an increase in certificates of deposit of $10.0
million. The variety of deposit accounts offered by the Bank has allowed it to
be competitive in obtaining funds and to respond with flexibility to changes in
consumer demand. The Bank has become more susceptible to short-term fluctuations
in deposit flows, as customers have become more interest rate conscious. Based
on its experience, the Bank believes that its passbook savings, statement
savings, NOW and demand accounts are relatively stable sources of deposits.
However, the ability of the Bank to attract and maintain certificates of
deposit, and the rates paid on these deposits, has been and will continue to be
affected by market conditions.
When deposit growth does not match the growth of assets, other funding sources
such as FHLB advances are utilized. During the nine months ended March 31, 1998,
the Bank increased FHLB advances by $9.2 million since loan and securities
growth exceeded deposit growth. FHLB advances have generally been used to fund
the Bank's mortgage banking activities, loan and securities growth. See
"Liquidity" section for further discussion of the Bank's sources of funds.
Stockholders' equity increased from $22.6 million at June 30, 1997 to $23.4
million at March 31, 1998. The increase was primarily due to net income of
approximately $740,000 and an increase in the unrealized gain on securities
available for sale of approximately $215,000. The Company's securities
classified as available for sale are carried at market value, with unrealized
gains or losses reported as a separate component of stockholders' equity, net of
federal income taxes.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The Bank has performed a review to determine whether or not any Bank West system
is exposed to the risk of year 2000 noncompliance. An inventory of electronic
systems and programs has been completed. All electronic systems and programs
utilized by Bank West are maintained or supported by third party vendors. The
most significant vendor, Fiserv, which acts as a service bureau for the Bank's
on-line data processing expects to complete its year 2000 project by mid-1998.
The Bank intends to participate in the testing and verification of year 2000
related changes made by Fiserv during the third calendar quarter of 1998.
Testing and verification of other software and hardware vendors is ongoing. The
Bank has received representation letters from many of its vendors indicating
that their system is or will be year 2000 compliant. Although the exact cost of
achieving year 2000 compliance will not be determined until after the testing
and verification phases are complete, including an assessment as to
compatibility of any new vendor software with the Bank's current hardware or
software, the range of costs to achieve year 2000 compliance is currently
estimated between $75,000 and $100,000.
RESULTS OF OPERATIONS
Net Income. Net income decreased by $45,000 or 17.8% in the quarter ended March
31, 1998 from $253,000 in the comparable 1997 period to $208,000 in the current
quarter. The decline in net income in the current quarter was primarily due to
reduced gains on trading securities by $89,000 as a result of the Company's
decision in January 1998 to divest its remaining equity securities trading
portfolio stemming from a mark to market loss of $391,000 taken during the
quarter ended December 31, 1997. For the nine months ended March 31, 1998, net
income increased by $153,000 or 26.1%. The increase was primarily due to the
one-time FDIC special assessment taken during the prior year's September 30,
1996 quarter, which had a negative after tax impact of $365,000 (See Note 8 for
further discussion). The special assessment amount, however, was largely offset
by a decrease in trading gains by $399,000, which had an after tax impact of
approximately $263,000.
Net Interest Income. Net interest income increased by $200,000 or 18.9% and by
$458,000 or 14.5% in the three and nine months ended March 31, 1998 over the
comparable 1997 periods, respectively. Net interest income increased due to an
increase in the average interest rate spread, which increased to 2.61% and 2.54%
in the three and nine months ended March 31, 1998, respectively, from 2.45% and
2.41%in the comparable 1997 periods. The increased spreads were primarily due to
an increase in the yield on interest-earning assets to 7.68% and 7.77% in the
three and nine months ended March 31, 1998, respectively, from 7.55%in both of
the comparable prior periods, reflecting continued emphasis on higher yielding
construction, home equity, consumer and commercial loans. In addition, average
interest-earning assets increased by $25.5 million or 18.5% and $23.4 million or
17.3% in the three and nine months ended March 31, 1998, respectively, over the
comparable prior periods, primarily due to an increase in loans and
collateralized mortgage obligations. In addition, the cost of interest-bearing
liabilities decreased to 5.07% from 5.10% in the most recent quarter, reflecting
lower rates on repricing FHLB borrowings. However, the cost of interest-bearing
liabilities increased during the nine months ended March 31, 1998 to 5.23% from
5.14% in the comparable prior period due to reflecting higher costing FHLB
borrowings in the first two quarters of the fiscal year versus the prior period.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Provision for Loan Losses. The provision for loan losses increased by $6,000 or
40.0% and by $13,000 or 28.9% in the three and nine months ended March 31, 1998,
respectively, over the comparable 1997 periods. The allowance for loan losses
totalled approximately $283,000 or .23% of the total loan portfolio and 43.2% of
nonperforming loans at March 31, 1998. The nonperforming loans at March 31, 1998
were comprised primarily of one- to four-family mortgage loans, construction
loans to builders which require a loan-to-value ratio of 75% or less and
consumer loans. At March 31, 1998, $21,000 of specific reserves have been
assigned to nonperforming loans.
The Bank's management establishes allowances for loan losses. On a quarterly
basis, management evaluates the loan portfolio and determines the amount that
must be added. These allowances are charged against income in the year they are
established. When establishing the appropriate levels for the provision and the
allowance for loan losses, management considers a variety of factors, in
addition to the fact that an inherent risk of loss always exists in the lending
process. Consideration is also given to the current and future impact of
economic conditions, the diversification of the loan portfolio, historical loss
experience, delinquency rates, the review of loans by loan review personnel, the
individual borrower's financial and managerial strengths, and the adequacy of
underlying collateral.
Other Income. Total other income decreased by $49,000 or 16.3% in the three
months ended March 31, 1998 from the comparable prior period. The decrease was
primarily due to an $89,000 or 89.9% decrease in gain on trading securities. The
decrease in gain on trading securities was primarily due to the Company's
decision to divest its existing equity securities trading portfolio in light of
recent stock market volatility which had resulted in a $391,000 mark to market
loss in the prior quarter. Accordingly, the current quarter's trading gain
reflects the mark to market adjustment relating to remaining equity securities
yet to be liquidated. At March 31, 1998, the trading portfolio was $1.7 million.
The trading securities portfolio is comprised of equity securities in various
financial services institutions. The decline in trading gains was partially
offset by an increase in gain on sale of loans by $24,000 or 19.5% due to a $9.0
million increase in the volume of loans sold during the quarter compared to $7.2
million in the comparable prior period. In addition, gain on securities
available for sale increased by $31,000 compared to the prior quarter due to the
sale of a portion of the collateralized mortgage obligation portfolio.
During the nine months ended March 31, 1998, total other income decreased by
$275,000 or 22.9% primarily due to a decline in trading gains of $399,000 or
69.0%. This amount was partially offset by an increase in gain on sale of loans
of $66,000 or 16.5% due to an increase in loans sold from $26.4 million to $30.4
million in the nine months ended March 31, 1998. In addition, gain on securities
available for sale increased by $45,000 compared to the prior period due to the
sale of a portion of the collateralized mortgage obligation portfolio.
Other Expenses. Total other expenses increased by $213,000 or 22.2% in the
quarter ended March 31, 1998 over the comparable 1997 period. The increase was
primarily due to an increase in compensation and benefits expense of $158,000 or
28.2% attributable to hiring additional staff to support the expansion of the
Bank's core business activities and a $40,000 increase in ESOP expense due to
the appreciation of the Company's common stock price. The remaining categories
of other expenses did not significantly change in the three months ended March
31, 1998.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Total other expenses decreased by $60,000 or 1.8% in the nine months ended March
31, 1998 over the comparable 1997 period. The decrease was primarily due to a
$553,000 one-time government mandated FDIC special assessment to recapitalize
the SAIF insurance fund on September 30, 1996 that did not occur during the
current nine month period. Excluding the one-time FDIC special assessment, other
expenses increased by $493,000 or 17.2% in the nine months ended March 31, 1998
over the comparable 1997 period. The increase was primarily due to increased
compensation and benefits expense of $399,000 or 24.0%, partly due to higher
ESOP expense of $126,000 relating to the increase in the Company's stock price
compared to the prior period. In addition, the Bank hired additional staff to
expand its core business activities. Professional fees increased by $63,000 or
39.4% related to higher legal fees unrelated to litigation. State taxes
increased by $24,000 or 55.8% due to higher pre-tax income levels, as defined.
These amounts were partially offset by a $55,000 or 53.4% decline in FDIC
insurance expense (excluding the one-time assessment) as a result of the annual
premium reduction from .23% to .064%. The other categories of other expenses did
not significantly change in the nine months ended March 31, 1998.
Federal Income Tax Expense. Federal income tax expense decreased by $23,000 in
the quarter ended March 31, 1998 and increased by $72,000 in the nine months
ended March 31, 1998 over the comparable 1997 periods. Federal income tax
expenses were based on pre-tax income levels for the respective periods.
LIQUIDITY
Bank West's primary sources of funds are deposits, principal and interest
payments on loans, sales of loans, maturities of securities, and FHLB advances.
While scheduled loan repayments and maturing investments are readily
predictable, deposit flows and loan prepayments are more influenced by interest
rates, general economic conditions and competition. Bank West uses its capital
resources to fund mortgage loan commitments, maturing certificates of deposit
and savings withdrawals, and to provide for its foreseeable short and long-term
liquidity needs.
Bank West is required under applicable federal regulations to maintain specified
levels of "liquid" investments in qualifying types of U.S. Government, federal
agency and other investments having maturities of five years or less. Current
federal regulations require that a savings institution maintain liquid assets of
not less than 5% of its average daily balance of net withdrawable deposit
accounts and borrowings payable in one year or less. At March 31, 1998, Bank
West's liquidity was 9.6% or $6.1 million in excess of the 5% minimum federal
requirement.
REGULATORY CAPITAL
The Bank is subject to regulatory capital requirements administered by federal
banking agencies. Capital adequacy guidelines and prompt corrective action
regulations involve quantitative and qualitative measures of assets,
liabilities, and certain off-balance-sheet items calculated under regulatory
accounting practices.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. If only adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required. The minimum
requirements are:
<TABLE>
<CAPTION>
Capital to Risk-
Weighted Assets Tier 1 Capital to
Total Tier 1 Average Assets
----- ------ --------------
<S> <C> <C> <C>
Well capitalized 10.0% 6.0% 5.0%
Adequately capitalized 8.0 4.0 4.0
Undercapitalized 6.0 3.0 3.0
</TABLE>
During December 1997, the Bank converted from a federally chartered savings bank
to a state chartered savings bank. At March 31, 1998, the Bank's capital
satisfied the well capitalized requirement. Actual capital levels (dollars in
millions) and minimum required levels were:
<TABLE>
<CAPTION>
Minimum Required
To Be Well
Minimum Required Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Regulations
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
March 31, 1998
Total capital (to risk-weighted assets) $19.8 21.1% $7.5 8.0% $9.4 10.0%
Tier 1 capital (to risk-weighted assets) 19.5 20.8 3.7 4.0 5.6 6.0
Tier 1 capital (to average assets) 19.5 11.7 6.7 4.0 8.3 5.0
June 30, 1997
Total capital (to risk-weighted assets) $18.7 23.4% $6.4 8.0% $8.0 10.0%
Tier 1 capital (to risk-weighted assets) 18.4 23.1 3.2 4.0 4.8 6.0
Tier 1 capital (to adjusted total assets) 18.4 12.2 4.5 3.0 7.6 5.0
</TABLE>
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities," provides
authoritative guidance as to the accounting and financial reporting for
transfers and servicing of financial assets and extinguishment of liabilities.
Example transactions covered by SFAS No. 125 include asset securitization,
repurchase agreements, wash sales, loan participations, transfers of loans with
recourse and servicing of loans. The Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings. The Statement also requires measuring instruments that
have a substantial prepayment risk at fair value, much like debt instruments
classified as available for sale or trading. While SFAS No. 125 supersedes SFAS
No. 122, "Accounting for Mortgage Servicing Rights," it only marginally modifies
the accounting and disclosure requirements of SFAS No. 122. SFAS No. 125, as
amended by SFAS No. 127, is expected to have no material impact on the Company's
consolidated financial condition or results of operations.
<PAGE>
BANK WEST FINANCIAL CORPORATION
Form 10-Q
Quarter Ended March 31, 1998
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities and Use of Proceeds:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security-Holders:
There are no matters required to be reported under this item.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibits: The following exhibit is filed herewith:
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during
the quarter ended March 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANK WEST FINANCIAL CORPORATION
Registrant
Date: May 14, 1998 /s/Paul W. Sydloski
-------------------------------
Paul W. Sydloski, President and
Chief Executive Officer
(Duly Authorized Officer)
Date: May 14, 1998 /s/Kevin A. Twardy
-------------------------------
Kevin A. Twardy, Vice President and
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,603,556
<INT-BEARING-DEPOSITS> 3,621,875
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,694,068
<INVESTMENTS-HELD-FOR-SALE> 31,541,679
<INVESTMENTS-CARRYING> 8,986,168
<INVESTMENTS-MARKET> 9,042,877
<LOANS> 123,755,043
<ALLOWANCE> 282,862
<TOTAL-ASSETS> 180,354,356
<DEPOSITS> 117,556,257
<SHORT-TERM> 13,209,202
<LIABILITIES-OTHER> 1,158,126
<LONG-TERM> 25,000,000
0
0
<COMMON> 26,237
<OTHER-SE> 23,404,534
<TOTAL-LIABILITIES-AND-EQUITY> 180,354,356
<INTEREST-LOAN> 7,245,199
<INTEREST-INVEST> 1,755,483
<INTEREST-OTHER> 219,463
<INTEREST-TOTAL> 9,220,145
<INTEREST-DEPOSIT> 4,124,054
<INTEREST-EXPENSE> 5,605,678
<INTEREST-INCOME-NET> 3,614,467
<LOAN-LOSSES> 57,000
<SECURITIES-GAINS> 220,351
<EXPENSE-OTHER> 3,364,208
<INCOME-PRETAX> 1,120,050
<INCOME-PRE-EXTRAORDINARY> 1,120,050
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 739,990
<EPS-PRIMARY> .31
<EPS-DILUTED> .28
<YIELD-ACTUAL> 7.77
<LOANS-NON> 655,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 261,862
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 282,862
<ALLOWANCE-DOMESTIC> 20,998
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 261,864
</TABLE>
